What goes UP must come DOWN. Median Phoenix metro area home prices continue to fall to an expected $445K in August (pending final numbers) after reaching a record median high of $475K in May and June. Here is what to expect next...read on.
UP and Now DOWN Median House SOLD Prices Last 3 Years in Phoenix Arizona Metro
$445K August 2022 (Expected Pending Final Numbers)
$454K July 2022
$475K June 2022
$475,000 May 2022
$470,000 April 2022
$460,000 March 2022
$450,000 February 2022
$427,000 December 2021
$333,000 December 2020
$290,000 December 2019
Experts are saying that although Metro Phoenix’s housing market continues to cool the last two months, but don’t expect a repeat of the last crash back in 2007.
Catherine Reagor of the Arizona Republic reported today, September 1 that, "Home sales and prices are dropping as the supply of homes for sale is jumping. It’s also taking longer for properties to sell, and sellers are offering more concessions to buyers. Housing analysts are calling the market “balanced” after more than a year and a half of an overly hot market. Heady price jumps and corporate buyers paying cash had shut the door on many prospective buyers. Higher interest rates, record inflation and stock market swings are all behind the slowing.
A cooling in the market was expected because price increases of 3% to 5% a month aren’t sustainable, said housing analyst Tom Ruff with the Arizona Regional Multiple Listing Service’s Information Market. “We find ourselves knocking on the door of a balanced market,” he said. “A market where strange words like incentives, concessions, price drops and buydowns are now a part of our daily vocabulary.”
The region’s median home price is on track to fall to $445,000 in August.
Home sales fell almost 23% in July across the Phoenix area and are down about 32% from July 2021.
The number of houses for sale jumped 15% in July to almost 21,000. That’s almost double the listings available to buyers in July 2021.
It took three days longer to sell a home in July than in June, with the average climbing to 33 days. That’s five days longer than a year ago. In February 2008, as the housing crash hit, it took a record 138 days for Valley homes to sell.
Almost 10% of sales during August included concessions from sellers to buyers, according to the Cromford Report. That’s triple the rate of a year ago. The typical concession is to pay for some of the closing costs.
The average 30-year mortgage rate is now about 5.13%, compared with 3.22% in January and 2.77% a year ago."
No signs of crash
Reagor continued in her article, "The market is definitely slowing, but it’s becoming balanced, said Tina Tamboer, senior housing analyst with Cromford.
“And that’s a really good thing for buyers,” she said.
She compared the differences between the boom that started in 2005 that led to the 2008 crash to metro Phoenix’s current market.
● During the boom, most buyers got 100% financing, didn’t use down payments and had risky subprime loans. Those mortgages were high foreclosure risks that led to the bust.
● Most buyers since the crash have had to put down significant down payments or paid cash. About 30% of Phoenix area homebuyers paid cash during the past year. Current mortgages are low foreclosure risk, according to Cromford.
● During the boom, lenders backed many mortgages for buyers with bad or no credit and incomes that didn’t justify the amounts of the loans.
● Since the crash, lenders require higher credit scores and incomes. Also, regulations adopted since then limit subprime lending.
● Then, home building was far outpacing population growth because of speculative buying and bad population growth data. That led to overbuilding, many vacant homes and half-built ghost subdivisions across metro Phoenix.
● Now, home building is substantially lagging population growth, and the Valley’s demographic data is much better."
If you have been sitting on the fence about buying a home, now may be the time to buy with home prices dropping the past 2 months and mortgage rates for a while longer are still closer to record lows than highs hovering in the 5-6% range. The Federal Reserve has hinted they plan to raise rates again in September to fight inflation with more increases expected in the months again. Buying a home with a lower mortgage rates has a big determination on the monthly payment and amount of interest paid over the life of a mortgage. Don't expect mortgag rates to go down anytime soon and do expect them to increase.
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Hedge Against Inflation
Buying a home instead of renting remains as an important "Hedge Against Inflation". Locking in a mortgage payment for 30 years instead of renting with continual rent increases while gaining equity in your home each month is a proven hedge. Also, your home will appreciate over time building even more equity and wealth. Mortgage interest is still deductible from your your income saving in income taxes which is still another benefit.
Moving to Sunny Arizona
"The Valley is drawing many new residents from higher priced areas who can pay the rapidly rising prices....Many of the people moving to the Valley are coming from San Francisco, Los Angeles, Chicago and New York where home prices are much higher." Currently we have the demand for homes in the Phoenix metro but the supply of individuals willing to sell their homes is low. Until the supply equals the demand home prices are expected to rise as long as people can afford to buy the homes.
Are you ready to move...think about the sunny Phoenix metro in Arizona? Yes prices are on the rise but mortgage rates at 6% are still closer to historic lows than highs. Both home prices and mortgage rates are expected to rise in 2022. See what is for sale at the moment as presented here.
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